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Filing a Homeowners Insurance Claim

If your house has been damaged or destroyed by a tornado, fire, or some other disaster, it's time to make your homeowners insurance policy start working for you. Filing a claim is the first step toward getting your life back on track.

Contact your agent as soon as possible

Call your insurance agent or your insurance company's claims hot line immediately. Getting your agent involved right away should help speed things along and get you some personal attention. Have the company send you all the forms necessary for making your claim, and find out what else you need to do. Nail down when a claims adjuster will arrive and when you are likely to receive a settlement.

Make temporary repairs

If your home is damaged, you should make whatever temporary repairs are needed to protect your home from further damage and from causing injury to you and others. Cover holes in the roof, walls, doors, and windows with plastic or boards. Be careful not to risk your own safety in making the repairs--hire someone to make them if necessary. Save receipts for any material you buy, and make copies of the bills for your records. Your insurance company will reimburse you for the costs. Take photos or videos of the damage before you begin cleaning up. Don't make extensive permanent repairs until after the claims adjuster has been to your home and assessed the damage.

Additional living expenses

If your house is uninhabitable, you'll need to set yourself up in a temporary residence. Most homeowners policies cover additional living expenses such as incremental food and housing costs, telephone or utility installation costs, extra transportation costs to and from work or school, and relocation and storage expenses. Your insurance company may advance you money for these expenses. Some companies limit additional living expenses to the amount actually spent during a certain period of time, such as 12 months. Others pay 20 percent or more of the amount of dwelling coverage on your home.

Know your policy

Before you make a claim, it's important to understand what your policy says. Make sure you know what's covered and what's not, and what the deductibles are. For instance, most insurance companies will pay for the removal of trees that have fallen and damaged your house, but they usually won't pay to replace trees or shrubs damaged in a storm. Also, homeowners policies generally don't cover flood damage, but they do cover damage from rain coming through a hole in the roof or a broken window, if the hole or broken window was caused by the same storm causing the rain. If you're unsure whether an item or peril (i.e., an event that causes damage or injury) is covered, check with your agent or insurance company representative. If you have questions about the policy, the time to ask is before you make a claim.

Get an estimate or two

If your house needs major repairs or needs to be rebuilt, it's important to get at least two estimates of how much it will cost. The adjuster may be able to approve your claim on the spot if you have reliable estimates from reputable professionals. Get written bids from experienced, licensed contractors on the repair work needed. The bids should include details of the materials to be used and prices charged on a line-by-line basis.

Prepare a list of lost items

Make lists of all your lost or damaged property, including brand names and model numbers where possible. Try to take photographs of the damage. Don't forget to list items such as clothing, sports equipment, tools, china, linen, outdoor furniture, holiday decorations, and hobby materials. If you have previously prepared a home inventory, put together old receipts, bills, and brochures to help establish the price and age of everything that needs to be replaced or repaired. It's advisable to store a copy of your home inventory in a safe place away from your house.

If your property was destroyed and you no longer have records, you will have to work from memory. Picture the contents of every room and write a description of what was there. Try to recall where and when you bought each item and approximately how much you paid. Don't throw out damaged furniture and other items, because the insurance adjuster will want to see them.

Prepare for the adjuster's visit

An adjuster (a person trained to assess damage) may visit your home to view the situation. Usually, the more information you have about your damaged home and belongings, the faster your claim can be settled. Be sure to keep copies of lists and other documents you submit to your insurance company. Identify any structural damage to your home and other buildings on your premises, like a garage, toolshed, or swimming pool. Make a list of everything you would like to show the adjuster--cracks in the walls, damage to the carpeting, and missing roof tiles. If structural damage can't be seen, discuss this with the adjuster. In some cases, he or she may recommend hiring a licensed engineer, architect, or electrical inspector to inspect the property. Most insurance companies pay for such inspections. If you feel that the adjuster hasn't made a complete evaluation of the loss on the first visit, set up a second visit.

Although your insurance company provides an adjuster at no charge to you, you have the option of retaining an adjuster with no connection to your insurance company, known as a public adjuster. Public adjusters may charge you as much as 15 percent of the total value of your settlement for his or her services (the fee isn't covered by your insurance policy). In return, you have someone to help you identify and document your losses. If you decide to use a public adjuster, check his or her qualifications by calling your state insurance department. In some states, public adjusters must be licensed. Ask your agent, a lawyer, and friends for the name of a public adjuster they recommend.

How does the settlement process work?

The first settlement check you get from your insurance company is often an advance, not a final payment. But if you're offered an on-the-spot settlement, you can accept the check right away and later reopen the claim and file for an additional amount if you find further damage. When the rebuilding is done, make certain that you're completely satisfied with the repair work and that the job has been completed before signing any forms.

When both the structure of your home and your personal belongings are damaged, you generally get two separate checks from your insurance company. Also, keep in mind that if your home is mortgaged, the check for home repairs will generally be made out to both you and your mortgage lender. As a condition of your mortgage, the lender has a right to hold a portion of the check until the necessary repairs are made.

If you have a replacement cost policy for your possessions (a policy that pays you each item's current purchase price), you'll need to replace the damaged items yourself before your insurance company reimburses you for these costs. Should you decide not to replace some items, you'll receive their actual cash value (original purchase price, minus depreciation) in settlement.

If you're dissatisfied with the insurance company's offer

There are a number of steps you can take if you're unhappy with the way the company has handled your claim or with the amount of money you've been offered as a final settlement. If you feel the settlement amount is too low, file a formal appeal with the insurer. Try to get your agent to back you up. In many cases, you can obtain a higher settlement amount. Or, contact your state insurance commissioner's office or the National Insurance Consumer Helpline at (800) 942-4242. These organizations can take up your case and deal with your insurance company on your behalf. As a final resort, you can contact an attorney who specializes in insurance cases and seek remedy in the courts.